Huawei CFO Meng Arrested in Canada

Wanzhou Meng isn’t just any C-suite executive. As the daughter of Huawei Technologies Co. founder Ren Zhengfei and a possible heir to his company, her arrest in Canada raises the stakes in an already complicated standoff between the U.S. and China.

The chief financial officer in her mid-40s was born to Meng Jun, the daughter of a senior Sichuan government official, and Ren, an army engineer. In 1987, her father started Huawei, and over the next three decades it would expand to become China’s biggest maker of smartphones and telecommunications equipment. Meng and Ren had two children: Wanzhou and her younger brother Ren Ping.

Since joining Huawei over 20 years ago, Meng has gone from helping out at sales exhibitions to become a central figure in the company’s leadership -- though the question of whether she will eventually take over from her father remains. Despite her family’s wealth and connections, the executive has eschewed the socialite lifestyle embraced by her younger half-sister, a ballerina studying at Harvard University.

“She’s always very confident” and highly competent, said James Yan, who has met Meng at public events. The arrest and threat of sanctions are a big risk for the company in part because Meng is one of its most important executives, said the research director at Counterpoint Research, which analyzes the technology market.

Meng -- who goes by both Cathy and Sabrina -- took her mother’s last name at 16. Other than a short stint at China Construction Bank after graduating from college, she’s spent her entire working life at Huawei. In 1997, she left to get a master’s degree from Huazhong University of Science and Technology, returning a year-and-a-half later to the company’s finance department.

Ren Zhengfei. (Bloomberg)

Rumours Swirl

At Huawei, Meng and her younger brother Ren were the regular subject of speculation within the company and in the media that their presence at Huawei was part of their father’s succession planning. Ren was so strongly viewed as the next head of the company that the elder Ren sent an internal email in 2013 sharply denying the possibility. Ren is not a member of the company’s board.

In his email, Ren Zhengfei laid out qualities a successor should have, including vision, character and industry-specific knowledge, before concluding "none of my family members possess these qualities" and "will never be included in the sequence of successors," online news service Sina Tech reported.

Despite the rebuke, Meng continued to rise through the ranks at Huawei. The company said she was executive director and CFO in 2011, when it disclosed its senior leadership for the first time. In December 2011, her father told employees he had cancer surgery twice in the past eight years and announced a rotating system for senior executives to prepare them to lead the company.

The system began with a rotation of CEOs. That has recently shifted to a new model that installs a new chairman every six months who runs the company’s day-to-day operations. The current rotating chairman is Guo Ping. Ren Zhengfei is the company’s CEO.

In March, Meng replaced her father as a vice chairman. News of her arrest provoked an immediate protest from the Chinese embassy in Canada, demanding the U.S. and its neighbour free her. Hong Kong shares fell on Thursday as the incident reignited concerns about U.S.-China tensions. Huawei’s dollar bonds tanked to record lows.

Company Succession

Meng’s ascension to the top job appears unlikely at this time.

There is potential for her to become CEO if she does a stint as rotating chairman, but until that happens she probably doesn’t stand a chance, a headhunter familiar with the company’s executives said.

Ren has not displayed any noticeable favour to his daughter at the company, said an employee who declined to be named. While Meng has a lot of influence over the finance team, her expertise in other areas of the business is perceived by others at the company as limited, the person said. A former employee described her as charming and elegant, coming across almost like a diplomat and at ease around bigwigs and government officials.

Meng’s marital status is unclear. In 2013, she denied that Xu Wenwei, a member of Huawei’s board and the company’s Chief Strategy Marketing Officer, is her husband. She told 21st Century Business Herald that she has two children, who were 10 and 4 at the time.

Ren Zhengfei has at least one other daughter. After divorcing Meng’s mother, he married Yao Ling and had they had a daughter, Annabel Yao, a computer science student at Harvard in her early 20s, according to the South China Morning Post. Yao, who danced the opening waltz at the Bal des Débutantes in Paris last month, has said she has no interest in joining Huawei. Ren’s third wife, Su Wei, was pictured in a Paris Match magazine article on the event.